iPhone 5C, iPhone 5S launched as Apple sets sights on broader market

The iPhone 5C is available in five colours.

Photograph by: Justin Sullivan/Getty Images
, Financial Post

For the first time Apple Inc. has separated its iPhone line into two distinct tiers — one for its high-end users, and the other for budget-conscious consumers who want to save money by purchasing a less expensive device with fewer features.

The world’s largest technology company announced not one, but two new iPhones on Tuesday during an event at its Cupertino, Calif.-based headquarters, its first major shift in mobile strategy since the introduction of the iPhone in 2007.

There is, of course, the iPhone 5S, an updated version of last year’s flagship iPhone 5 with a fingerprint scanner built-in. But rather than continue to sell the iPhone 5 for a reduced price, it has instead been replaced by the iPhone 5C, a budget-friendly, polycarbonate-backed iPhone, sold in five bright colours.

The addition of a lower-cost, less powerful iPhone has been widely anticipated in recent months — thanks, in part, to the continued success of Apple’s past generation iPhone 4 and iPhone 4S device, as well as growing pressure from competitors such as Samsung Electronics Co. Ltd., LG Corp. and Motorola, which sell low-cost yet capable phones running Google Inc.’s Android mobile operating system.

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The iPhone 5C is available in five colours.

Handout/Apple

The Apple iPhone 5s in gold.

Handout/Apple

By making a lower-cost and higher margin alternative to Apple’s flagship iPhone official, the company believes it can woo a segment of consumers for whom the iPhone 5 was previously too expensive, while shoring up slowing iPhone sales.

“The business has become so large,” said Apple chief executive Tim Cook on the company’s decision to instead replace the iPhone with “not one, but two new designs.”

The iPhone 5C can be pre-ordered on Sept. 13 (though no word on the iPhone 5S). Both phones will be sold in-store and online starting Sept. 20, for purchase in the U.S., Canada, and other countries worldwide.

Rogers, Bell and Telus have confirmed they will carry the two phones on Sept. 20, though pricing has yet to be announced.

Apple’s stock was down about 2%, or $11.06, to $495.11, around 3:30 p.m. ET on the Nasdaq, shortly after the iPhones were revealed.

The new iPhone 5C is almost identical to last year’s iPhone, but with a redesigned, polycarbonate-backed shell. It comes with with an A6 processor, the same 8 megapixel camera, a 4-inch screen and LTE connectivity, but with a slightly larger battery and a new FaceTime HD camera with improved low-light performance on the front of the device.

It will be priced at $99 for 16GB of storage or $199 for 32GB of storage in the U.S, and sold in green, white, blue, pink, and yellow colours.

Bought unsubsidized and unlocked direct from Apple, the iPhone 5C will cost $599 for 16GB and $719 for 32GB.

“iPhone 5C is everything iPhone 5 was and more, in an all-new design packed with great features,” said Philip Schiller, Apple’s senior vice president of worldwide marketing, in a statement.

The 5S features a fingerprint sensor.

Justin Sullivan/Getty Images

The camera has “auto image stabilization,” which helps avoid blurry pictures, and a slow-motion camera for video.

Justin Sullivan/Getty Images

Make your 5C even more colourful.

Handout/Apple

It is also the first iPhone to be sold in China from initial launch.

The new iPhone 5S, meanwhile, looks identical to last year’s iPhone 5. As rumoured, it will be sold in both black and white, as well as a new colour, gold. It also boasts a fingerprint sensor built into the home button, which can be used to unlock the phone, or even make iTunes purchases without entering a password.

As expected, the camera has been updated too – this time with a larger-sized 8 megapixel sensor, dual LED flash, burst-mode shooting and slow-motion 120fps video capture at 720p.

The phone also sports an A7 processor that is twice as fast at graphics and processing tasks, as well as a new M7 chip. The M7 is a dedicated co-processor that continuously measures motion sensors, such as accelerometer, compass, and gyroscope — no doubt useful for fitness apps — but with less of an impact on battery life than past phones.

Battery life is said to be equal to or greater than the iPhone 5, with ten hours 3G talk time, ten hours of browsing, 40 hours of music listening, and 250 hours of standby. It is also LTE capable.

The iPhone 5S starts at $199 for 16GB of storage, $299 for 32GB, and $399 for 64 GB on a two-year contract.

Bought unsubsidized and unlocked direct from Apple, the iPhone 5S will cost $719 for 16GB, $819 for 32GB, $919 for 64GB.

To the dismay of analysts and investors, Apple was not as aggressive on price as some had hoped.

“Many investors were hoping for that one single atomic event where they got aggressive on pricing,” said Gene Munster, an analyst at Piper Jaffray Cos. “Instead, in Apple’s own way they think they can accomplish their goal — gaining market share — without blowing up their margins.”

But even with a marginally lower-priced iPhone, Apple is “walking a tightrope between growth and profitability,” said Sarah Rotman Epps, an analyst at Forrester Research.

Both phones will run the latest version of Apple’s mobile operating system, iOS 7. Announced at the company’s Worldwide Developers’ Conference in June, the update has gone through a series of developer betas in recent months, with chief executive Tim Cook calling it “the biggest change to iOS since the iPhone.”

Of particular note is a completely redesigned user interface that trades so-called “skeumorphic” or real world user interface elements for a flat, simplified design where bold colours and transparency effects abound. There are also improvements to the voice-activated personal assistant Siri, and features such as Mission Control that put common tasks and settings in a hidden drawer that is accessed with an upward swipe from the bottom of the screen.

Craig Federighi, head of software at Apple, said on-stage that “downloading iOS 7 is like getting an all new device.”

New iOS device owners will also be able to download Apple’s iWork productivity suite for free.

The company also confirmed that its iOS 7 operating system will be available Sept. 18, and will require at least an iPhone 4 or iPad 2.

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